Why Crypto Pumps, the Risks, and How to Avoid Them

Jakarta, Pintu News – The crypto “pump” phenomenon often provokes simultaneous euphoria and fear among investors. Many are tempted by the sudden surge in prices – but without realizing it, they are trapped in a harmful market manipulation scheme. This article will take a neutral look at why crypto gets pumped, how it works, and how to protect yourself from the risks.

What is Crypto Pump and Pump & Dump?

Crypto pump is the activity of artificially inflating the price of a crypto asset, usually on tokens with low market capitalization and liquidity. These pumps are often organized in a coordinated manner through hype, false promotion on social media, and the use of influencers and bots. The main target of the perpetrators is to create a large price spike in a short period of time to make many investors FOMO (Fear of Missing Out).

The pump is usually followed by a “dump” phase, which is a massive sell-off by players after the price has peaked. As a result, the token price falls dramatically and new retail investors are left with huge losses.

Also Read: XRP Price Surges Again: Momentum Rising, Eyeing Key Resistance

Why is Crypto Vulnerable to Pump & Dump?

There are several reasons why crypto, especially new or small-cap tokens, are highly prone to being targeted by pump & dumps:

• Lack of Regulation: The crypto world still lacks oversight, unlike the traditional stock market. This leaves a wide gap for manipulators.
• High Volatility: Crypto prices are volatile, so extreme price swings are not uncommon.
• Decentralization & Anonymity: There is no single overseeing authority, and actors can act anonymously on the blockchain.
• The role of Social Media: Platforms such as Telegram, Twitter and Discord are often used to spread hype, bombastic claims and build a “herd mentality”.

How Does Crypto Pump & Dump Scheme Work?

1. Token Selection: Performers choose tokens with low capitalization and little demand for easy control.
2. Hype campaign: Hype is created through viral messages, “sure-fire” promotions, and fake testimonials.
3. Pump: Prices are artificially inflated through coordinated buying and FOMO social pressure.
4. Dump: After the price skyrockets, the perpetrators sell heavily. The price plummets, and ordinary investors are stuck with huge losses.

Case in point, the pump & dump scheme perpetrated against Viacoin on Binance in 2018 which saw its value soar by 300% in a short period of time before plummeting.

Crypto Pump Characteristics and Red Flags

• Rapid and unreasonable price increases
• Explosion of promotional activity on social media, usually from anonymous accounts or bots
• Pressure or invitation to buy “before it’s too late”
• Tokens with small capitalization and low liquidity
• No clear fundamental or project explanation of the token

Legal and Financial Risks

Pump & dump in traditional markets is a criminal offense. However, in the crypto world, regulation is still weak, making it often difficult to prosecute perpetrators. Victims of pump & dump schemes usually find it difficult to recover losses due to the anonymous and global nature of blockchain transactions.

Tips to Avoid Pump & Dump

• Do In-depth Research (DYOR): Don’t just follow trends. Check the whitepaper, development team, and project goals and roadmap.
• Avoid Excessive Hype: Be skeptical of “sure-fire” claims from anonymous sources.
• Portfolio Diversification: Don’t go all-in on one small-cap token.
• Use Trusted Platforms: Start with an exchange that is registered and supervised by the authorities.
• Beware of Buying Pressure and Bombastic Claims on Social Media Groups.

Conclusion

The crypto pump is a combination of weak regulation, high volatility, and sophisticated hype campaigns on social media. While the potential for quick profits does exist, the risk of loss is much greater-especially for novice investors who are easily carried away. The key is education, independent research, and always being on the lookout for investment red flags.

Also Read: $2 Billion Fresh Money Injection, Bitcoin Ready to Fly Again? Analyst: Big Crypto Rally Signals!

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Inquesta Forensic. Pump and Dump Crypto Schemes: How to Spot and Avoid Scams. Accessed July 17, 2025.